Thursday, September 14, 2006

Justice dep’t to probe alien control of PLDT

Eyes violations of Anti-Dummy Law

BY EVANGELINE DE VERA

JUSTICE Secretary Raul Gonzalez yesterday said he will direct the National Bureau of Investigation to look into the possible violations by the controlling owners of Philippine Long Distance Telephone of the Anti-Dummy Law in acquiring shareholdings exceeding the 40 percent cap on foreign ownership of public utilities.

Gonzalez was reacting to a Malaya report which placed foreign ownership in the telecommunication company at 61 percent.

Gonzalez, however, said he would not order an official investigation for fear of being accused of harassing foreign investors.

"Since there is no substantial evidence yet, I don’t want to order an investigation that will appear as if we are harassing businessmen. The policy of the government is to encourage businessmen to come in," he said.

Executive Secretary Eduardo Ermita said he will also look into the PLDT’s alleged violation of the Filipino ownership requirement.

He said he would likely tap the Presidential Commission on Good Government as he was not familiar with the shareholding and management structure of PLDT.

Gonzalez said he heard about the alien ownership issue in PLDT before the Malaya report came out, but was wary that any government move might alarm foreign investors.

"If we have something more than stories circulating around, yes, we will investigate. But we don’t want to unnecessarily appear like harassing business, big businessmen like them," he said.

He said that once it is shown that more than 40 percent of PLDT’s equity is owned by foreign investors, the management and the controlling shareholders could be charged with violating the Anti-Dummy Law (RA 2937).

This law provides: "Any person, corporation, or association which, having in its name or under its control, a right, franchise, privilege, property or business, the exercise or enjoyment of which is expressly reserved by the Constitution or the laws to citizens of the Philippines or of any other specific country, or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens … in any manner permits or allows any person not possessing the qualifications required by the Constitution, or existing laws to acquire, use, exploit or enjoy a right, franchise, privilege, property or business, the exercise and enjoyment of which are expressly reserved by the Constitution or existing laws to citizens of the Philippines or of any other specific country, to intervene in the management, operation, administration or control thereof, whether as an officer, employee or laborer therein with or without remuneration except technical personnel whose employment may be specifically authorized by the Secretary of Justice, and any person who knowingly aids, assists, or abets in the planning, consummation or perpetration of any of the acts herein above enumerated shall be punished by imprisonment for not less than five nor more than fifteen years and by a fine of not less than the value of the right, franchise, or privilege enjoyed or acquired in violation of the provisions hereof but in no case less than five thousand pesos."

In submissions to the New York Stock Exchange where PLDT and its major foreign investor, First Pacific, are listed, the investments of PCD Nominees Corp., presumed to be an arm of First Pacific registered in Bermuda, are stated at 31.23 percent.

Together with JP Morgan Hong Kong Nominees Corp. (Hong Kong) with an investment of 16.37 percent, NTT Communications Corp. (Japanese), with 6.91 percent and NTT Docomo (Japanese), with 6.91 percent, the foreign holdings of common shares in PLDT come up to 60.4 per cent.

These submissions are not identical to disclosures made to the Philippine Stock Exchange where PLDT is also listed.

In the company profile submitted to the NYSE, PCD Nominees Corp. with 31.23 percent, is described as foreign. The nationalities of the same company with identical equity are described as "various" in submissions to the Philippine Stock Exchange.

The number of PLDT board seats was recently increased from nine to 13. NTT has been allowed to nominate two seats. First Pacific is entitled to six or a total of eight members nominated by foreign stockholders.

This is equivalent to 60 percent of the board seats and identical to the extent of foreign holdings.

Based on intertwined relationships of First Pacific with other foreign firms, it appears that nearly all of the 60 percent foreign control is held by First Pacific, an Indonesian company operating out of Hong Kong and registered in Bermuda. – With Regina Bengco